Although the establishment of a limited company is more secure than that of an unlimited company, the former still requires the submission of several documents every year and the proprietor will face a fine if this deadline is exceeded. Don’t want to be fined? Read on to find out what documents you will need to prepare!
1st Document: Annual Returns
A local private company incorporated under the Companies Ordinance is required to comply with the Ordinance and submit an annual registration form called the NAR1 along with a registration fee of HK$105 within 42 days after the anniversary date of the incorporation of the company. For annual returns using the NAR1, local private companies are not required to deliver certified true copies of financial statements and the accompanying auditor’s report and director’s report at the same time. Only public companies and guarantee limited companies are required to do so at the same time.
If you do not submit your annual return until 42 days later, you will need to pay a late registration fee. The later you do this, the more you will be required to pay. The details are as follows:
|Date of delivery||Late payment registration fee (HKD)|
|42 days after the anniversary date of incorporation but less than 3 months||870|
|3 months after the anniversary date of incorporation but less than 6 months||1,740|
|6 months after the anniversary date of incorporation but less than 9 months||2,610|
|9 months after the anniversary date of incorporation||3,480|
It should be noted that the 42 days period includes Sundays and public holidays. Unless the 42nd day is a Sunday or public holiday, the period will be extended to the next day that is not a Sunday or public holiday. If the last day is a Saturday, there will be no change in the deadline and the Companies Registry will be closed. Therefore, it is recommended that documents should be submitted to the Companies Registry in person on or before the last day of the deadline—otherwise, a fine of HK$870 will be levied. If you want to deliver your documents by post, you have to submit them earlier. If the Companies Registry fails to receive the annual registration form within 42 days, it will be considered as overdue.
Tip: When filling in the annual return, you may have encountered difficulties calculating your company’s revenue because your company’s accounts are mixed with your private accounts. Reap Collect solves this problem by allowing you to manage your earnings in a centralized platform. Money can be directly remitted to your personal bank account without having to apply for a company bank account or pay a transaction fee, so tracking your payments collection becomes much easier!
If you fail to deliver your company’s annual return within the time limit, the Companies Registry may, in addition to prosecuting your company and each responsible person, consider removing your company’s name. Even if your company is very small and has not operated in the past few years, you still have to abide by the Company Regulations and pay an annual return and registration fee. A company may be exempted if it has been declared “inactive” under section 5 of the Companies Ordinance and delivered the relevant special resolution to the Companies Registry. Note that if the inactivity takes effect 42 days after the anniversary of your company’s incorporation, you will still have to submit this year’s annual return.
2nd Document: Employer’s Return of Remuneration and Pensions
“Employer’s return of remuneration and pensions” (hereafter “employer’s return”) refers to tax returns filled in by an employer for his or her employees. This includes information about employee salaries and pensions and will cover the financial year from 1 April to 31 March of the following year. In the employer’s return, the employer is required to submit the completed BIR56A form, update the personal data of each employee, and calculate the annual income of each employee according to the income classification of form IR56B. The following are the employees required to complete form IR56B:
- The total annual income of $132,000 or above (single person)
- Married persons (regardless of income)
- Part-time employees (regardless of income)
- Directors (regardless of income)
In addition, new employees, individuals who cease to be employed and those who depart from Hong Kong in the long-term or permanently are required to fill in different forms; namely, form IR56E (submit within 3 months), IR56F (submit 1 month before the cessation of employment) and two copies of form IR56G (approximately 1 month before departure from Hong Kong). Regardless of whether the employee provides his services in Hong Kong or overseas, the employer must, in the requisite form, fill in complete information regarding the employee’s cumulative remuneration. Generally, the Inland Revenue Department (IRD) will issue form BIR56A to employers on the first working day of April each year for the submission of “employer’s return of remuneration and pensions”. Having trouble recovering your employees’ remuneration every year? Pay your employees with ease by using your credit card on Reap Pay. Besides earning credit card rewards, you can also enjoy a repayment period of up to 58 days, which lends greater flexibility towards your company’s capital turnover.
3rd Document: Profits Tax Return
The corporate tax return is a must-do every year and the IRD will send tax returns to unlimited and limited companies annually. You need to complete the form and return it to the IRD together with the relevant documents within 1 month after it is sent out. Please refer to page 1 of the profits tax return for the deadline of submission. Unless your business is (i) an industry or business that has not been yet launched operations or has already ceased operations, or (ii) the trade or business in which you are engaged in has not earned assessable profits, whether yours is a new or old business, you must complete a profits tax return. Generally speaking, profits tax returns will be received 18 months after the commencement of the company’s business. If not, the employer should take the initiative to check with the IRD; for continuing business, it will be issued on the first working day of April each year.
4th Document: Renewal of Business Registration Certificate
All businesses operating in Hong Kong, regardless of their size, need to be registered within one month and renewed before the deadline. For renewal, the business registration department will issue a demand note for business registration about one month before the expiry of the validity of the existing business registration certificate. If the payment is not paid one month after the expiration of the business registration certificate, it is illegal and subject to a fine.